Bogleheads® on Investing Podcast 061: Cody Garrett on Early Retirement, host Jon Luskin
00:00:00.000 | Welcome to the 61st edition of the Bogleheads On Investing podcast.
00:00:14.920 | Today our special guest is Cody Garrett.
00:00:17.800 | I'm John Luskin and I normally host our Bogleheads live show for the folks of Twitter.
00:00:23.000 | I'm taking over for the normal host Rick Ferry while he takes a summer sabbatical.
00:00:37.160 | Please allow me to introduce Cody Garrett.
00:00:39.600 | Cody is an advice only financial planner, passionate about helping families refine their
00:00:44.960 | path to financial independence, as do it yourself investors.
00:00:50.120 | Cody specializes in comprehensive financial plan development, topic research, and personalized
00:00:55.720 | financial education.
00:00:57.740 | Some announcements before we get started on today's episode with Cody Garrett.
00:01:02.320 | This episode of the Bogleheads On Investing podcast, as with all episodes, is brought
00:01:07.840 | to you by the John C. Bogle Center for Financial Literacy, a nonprofit organization that is
00:01:13.680 | building a world of well-informed, capable, and empowered investors.
00:01:18.900 | Visit boglecenter.net where you'll find valuable information, including transcripts
00:01:23.580 | of podcast episodes.
00:01:25.720 | And at boglecenter.net/donate, you can make a tax-deductible donation to support the mission
00:01:32.280 | of improving financial literacy.
00:01:34.740 | And finally, a disclaimer, the following is for informational and entertainment purposes
00:01:39.220 | only and should not be relied upon as a basis for investment or personal financial advice.
00:01:45.520 | And with that, let's get started on our interview with Cody Garrett.
00:01:49.980 | Cody Garrett, welcome to the Bogleheads On Investing podcast.
00:01:54.380 | So glad to be here.
00:01:55.380 | Thanks so much, John.
00:01:56.380 | I'm super excited to get to meet you in person for the first time at the 2023 Bogleheads
00:02:01.160 | conference.
00:02:02.160 | I'm going to be there.
00:02:03.920 | And folks, as of this recording, there are roughly 60 spots left.
00:02:08.020 | So if you want to register for that conference, go to boglecenter.net/2023conference.
00:02:14.400 | Let's start with our first question.
00:02:16.120 | This question is from username 95 suited.
00:02:19.900 | He writes, does Cody have a process he uses with his clients to ensure their non-financial
00:02:25.340 | lives will be fulfilling in early retirement?
00:02:28.880 | What I realized is a lot of people focusing on retirement, they're really focused on what
00:02:32.820 | they're retiring from this emphasis on escaping something, right?
00:02:36.980 | It's like, I cannot wait to stop working.
00:02:39.580 | But it's really important that anytime I'm working with a financial planning client,
00:02:43.380 | they're really focused on what they're retiring from.
00:02:45.580 | But it's my job to help them understand what are they retiring to.
00:02:48.940 | I recently asked over 40,000 retirees on a Facebook group, what's the thing that you
00:02:54.260 | miss most about working besides the paycheck, besides the benefits?
00:02:58.700 | They missed conversations with colleagues and clients, collaborations with team members,
00:03:03.720 | challenges to solve and contributions to a greater purpose.
00:03:07.460 | Now you asked me about this process that I use to ensure non-financial lives will be
00:03:11.060 | fulfilling.
00:03:12.060 | I asked them, especially pre-retirees, hey, in which ways would you like to continue connecting
00:03:17.900 | and having conversations with others?
00:03:20.220 | In which ways will you collaborate with other people?
00:03:23.580 | Sometimes that means collaborations with other organizations, maybe a charity that they support.
00:03:27.720 | Which types of challenges would you like to solve?
00:03:29.720 | So some people retire and they really want to do maybe woodworking or they want to do
00:03:33.580 | those projects around the house.
00:03:34.980 | So they can be physical or mental challenges that they want to solve in retirement.
00:03:39.660 | And then lastly, how are you going to contribute in retirement to a greater purpose?
00:03:43.900 | Going to the Bogleheads conference, right?
00:03:45.660 | That's a way that you can have conversations, you can collaborate with others, you can learn
00:03:50.300 | some new challenging things.
00:03:51.940 | Some of the mental challenges you have can be possibly solved at going to a conference
00:03:55.340 | like that.
00:03:56.340 | And then you can contribute to something bigger than yourself by just being surrounded by
00:03:59.620 | other people within your community.
00:04:01.540 | So community, conversations, collaborations, challenges, and contributions.
00:04:05.860 | So start asking yourself even now, if you're not retired or you are retired, how can I
00:04:09.300 | do more of those things now that I'm retired?
00:04:12.020 | And for folks who are looking to get some community, they should check out their local
00:04:15.640 | Bogleheads chapters.
00:04:17.160 | We have a great chapter here in San Diego with a lot of retirees.
00:04:19.980 | And it's a great forum where folks can help each other make friends and talk about low
00:04:24.620 | cost investing.
00:04:26.060 | For folks who want to get involved with the Bogleheads community locally, check out the
00:04:29.680 | Bogleheads forums, where we have a page that lists local chapters.
00:04:34.300 | I'll link to that in the show notes for our listeners.
00:04:37.480 | One thing I want to add to that is we think about FIRE as standing for Financial Independence
00:04:41.620 | Retire Early, but I actually call it Financial Independence Recreational Employment.
00:04:46.780 | Financial independence isn't necessarily about stopping work or escaping from work.
00:04:50.760 | It's really about doing work because you want to, not because you have to.
00:04:54.180 | A lot of people who assume they're going to retire early, they end up working once they're
00:04:57.580 | financially independent.
00:04:59.180 | So keep in mind that financial independence doesn't mean you have to leave the work that
00:05:03.340 | you love.
00:05:04.340 | It means that you can do work that's even more fulfilling moving forward.
00:05:07.460 | Cody, can you talk about what some of the folks you've worked with have done in early
00:05:11.460 | retirement?
00:05:12.460 | In terms of conversations, I think a lot of people in retirement, they talk about spending
00:05:15.880 | more time with their family.
00:05:17.300 | And I think it's really important that when spending time with family, it's not just travel
00:05:21.020 | a lot, right?
00:05:22.020 | But also being really intentional about the conversations you're having with your family.
00:05:25.460 | So visualize, when we go on this trip as a family together, which type of topics do we
00:05:29.660 | want to discuss?
00:05:31.500 | And people who go into retirement, some of the most valuable conversations they have
00:05:35.700 | is about what I call the financial family tree.
00:05:38.820 | Sometimes families don't talk about money ever, but going into retirement, when you're
00:05:42.260 | talking with your family right after you retired, they're probably thinking about money.
00:05:45.860 | You're thinking about money.
00:05:47.100 | This might be a good time to start talking about some estate planning.
00:05:51.080 | So what are some of your expectations and their expectations financially in terms of
00:05:55.140 | multi-generational wealth?
00:05:57.140 | This can be a very difficult conversation to have, but I think this is the most fruitful
00:06:00.780 | conversation when done with grace and compassion.
00:06:04.040 | Instead of having them with colleagues and clients who are used to work, maybe you could
00:06:06.980 | have those deeper conversations with your family and not necessarily your kids.
00:06:11.380 | What are the conversations that you'd like to have with your spouse?
00:06:13.500 | Now you're probably spending more time at home with your spouse, if you're married or
00:06:16.860 | your partner or your neighbors.
00:06:18.660 | Maybe it's time you can actually start having conversations, you can start talking with
00:06:21.580 | people who live down the street.
00:06:23.120 | Your friends that you know that have been retired for a long time, and you can finally
00:06:25.700 | spend time with them.
00:06:26.700 | A really good example is clients who every Wednesday, they have a morning breakfast with
00:06:30.900 | all the friends they used to work with who are also retired.
00:06:33.620 | So think to yourself, what type of conversations do I want to have that build me up, that are
00:06:37.460 | energy giving, not energy draining conversations?
00:06:40.500 | The second is collaborations.
00:06:41.860 | I think collaborations can happen a lot of different ways.
00:06:44.860 | Sometimes you might have a work project that you want to spend some time with.
00:06:47.980 | A client that I work with, a fascinating story about what he wanted to retire to.
00:06:52.380 | He loves the Volkswagen vans, the big vans from the 60s, and he says, "I've never had
00:06:57.020 | one.
00:06:58.020 | I've always wanted one."
00:06:59.020 | He said, "When I retire, I'm going to buy my first Volkswagen van, and I want to spend
00:07:02.600 | most of my time fixing it up.
00:07:04.300 | I don't want to buy one that's turnkey.
00:07:05.540 | I want to buy one that's torn up and that I can work on and tinker with."
00:07:08.220 | First of all, that's a challenge to solve.
00:07:09.980 | That would be a challenge for me working on an old van from the 60s.
00:07:12.740 | He said, "Okay, well, maybe I can invite my son to help me work on this van together.
00:07:18.380 | Once it's drivable, I can take my son.
00:07:20.180 | We can have a father-son trip in this van that we've really tinkered with together."
00:07:24.900 | That's a very powerful way to continue building relationships with your family.
00:07:29.300 | We all know that you spend over 90% of the time with your kids during your lifetime before
00:07:34.540 | they're 18.
00:07:35.820 | If you're retiring, you do have kids, start thinking about what are some conversations
00:07:38.900 | I can have with them?
00:07:39.900 | What are some ways we can collaborate on projects together?
00:07:42.460 | Maybe we can have challenges to solve together, not just individually.
00:07:46.640 | One thing that's really important for me to mention here is that your physical, mental,
00:07:50.080 | spiritual, relational, and financial wellness are interrelated.
00:07:53.600 | Going into retirement, we're usually primarily focused on the finances.
00:07:57.320 | By the time we get to retirement, we realize that our physical health, our mental health,
00:08:01.640 | our spiritual practices, our relationships have been kind of on the back burner for a
00:08:05.440 | long time.
00:08:06.440 | If you're listening to this and you haven't retired yet, how can you improve your physical,
00:08:10.600 | mental, spiritual, relational health and not just be focusing on your financial spreadsheets?
00:08:16.300 | Because when you get to retirement, sometimes you have all the money in the world that you
00:08:19.680 | need to retire, but then you turn around and all your relationships are gone or they're
00:08:23.640 | not like they used to be.
00:08:25.200 | So building up those relationships, doing the exercise that you've always been wanting
00:08:28.800 | to get into, maybe hiring a counselor or a therapist to talk about some of your mental
00:08:32.880 | health struggles.
00:08:34.280 | Start having those conversations when you get into retirement.
00:08:37.320 | This one is from username John Arndt from Twitter who writes, "What's the best method
00:08:41.880 | for determining sustainable spending rates?
00:08:44.400 | For instance, how do you adjust the 4% withdrawal rate for retirees in their 40s?"
00:08:50.840 | The 4% rule or guideline, it's a decent rule of thumb.
00:08:54.700 | People using the 4% rule, they're making an assumption that they're going to be living
00:08:57.540 | in retirement solely off of their portfolio without other sources of retirement income,
00:09:01.780 | such as private and public pensions, social security, real estate income.
00:09:06.100 | But the best way to visualize variable sources of income and expenses in retirement is to
00:09:10.780 | use an advanced financial planning software.
00:09:12.980 | And now there are actually planning softwares even available to consumers, non-advisors.
00:09:16.680 | One for example is New Retirement.
00:09:18.560 | I know there's a lot of other Excel or Google Sheet versions that people have made.
00:09:22.540 | Keep in mind that financial planning software, the output is only as good as the input.
00:09:27.200 | When you're making assumptions for rates of return, inflation, life expectancy, it's better
00:09:32.160 | to be on the conservative side, right?
00:09:33.720 | So conservative meaning that you're expecting to live a long time, maybe 95 plus in terms
00:09:38.720 | of your age, testing out different levels of inflation, testing out really conservative
00:09:43.440 | rates of return.
00:09:44.440 | So with that said, use financial planning software, but understand that it's only going
00:09:49.160 | to show you information based on a lot of user assumptions and historical performance,
00:09:53.960 | which we know cannot guarantee future results.
00:09:56.720 | Take it with a grain of salt, but at the same time, I think that using a financial planning
00:10:00.600 | software for those variable sources of income and expenses could be a much better way than
00:10:05.240 | just saying, I'm going to use the 4% rule just based on my portfolio.
00:10:09.240 | And that 4% rule comes from Bill Bengen, who first looked at that question, how much can
00:10:14.480 | I spend in retirement without running out of money?
00:10:16.920 | We interviewed him on episode 35 of the Bogleheads live show.
00:10:20.680 | We also interviewed Christine Benz on episode 37, who sought to answer that same question
00:10:26.120 | through her research.
00:10:27.680 | And then lastly, in episode 41, we interviewed Derek Tharp of Team Kitsis, where he talks
00:10:32.420 | about how to use retirement planning software.
00:10:35.000 | I'll link to all those in the show notes for our listeners.
00:10:38.540 | One of the big things that accumulators miss that aren't retired yet or about to retire,
00:10:43.960 | they're thinking about the 4% rule in terms of multiplying their current expenses by 25.
00:10:49.000 | But let's say you have 10 years until retirement, the 4% rule does include inflation assumptions,
00:10:54.560 | but only once the distributions begin, not for the 10 years between now and when you
00:10:58.600 | start taking those distributions.
00:11:00.000 | So make sure that you inflation adjust your expenses.
00:11:03.880 | If you are going to be thinking about the 4% rule, even now, 10 years out from retirement.
00:11:08.380 | This question is from Man of Clouds from Boglehead Reddit, who asks, what percent of bond/stable
00:11:14.640 | value allocation does Cody recommend for someone five to 10 years from retirement?
00:11:20.380 | To manage sequence of returns risk, I prefer either a barbell approach, which would be
00:11:24.760 | really having equity on one side and laddered fixed income on the other side to set up typically
00:11:29.720 | about five years of short term stability.
00:11:32.240 | Another way to do it, especially popular within Boglehead's community, is to just use a total
00:11:35.400 | portfolio approach, but then have maybe one to three years of short term liquidity, cash
00:11:40.360 | equivalent, right?
00:11:41.360 | So you're not chasing growth and income with that portion.
00:11:43.900 | You're really focused on stability and liquidity with the three to five years of short term
00:11:48.240 | fixed income.
00:11:49.400 | And on the flip side, you're going growth with the equity side of that barbell.
00:11:53.080 | Although the second bucketing approach that I mentioned is often said to be irrational,
00:11:57.360 | especially people say that during bull markets, they're like, why would you hold on to so
00:12:00.440 | much cash when the market's going up?
00:12:02.560 | It can be a reasonable way to sustain portfolio withdrawals while reducing that sequence of
00:12:06.680 | returns risk.
00:12:07.840 | And as important that most people don't think about is the reduction of investor anxiety.
00:12:12.840 | So when I work with a retiree or somebody who's about to retire, they love knowing that
00:12:17.600 | the stock market volatility will not affect whether or not they're going to order dessert
00:12:21.740 | with dinner tonight.
00:12:23.120 | I always tell people we don't want to make long term financial decisions based on short
00:12:26.440 | term volatility.
00:12:27.600 | We also don't want short term volatility in our long term assets to affect how we spend
00:12:32.600 | and enjoy retirement in the short term, having three to five years of short term liquidity
00:12:36.880 | and stability can really give you permission to enjoy your lifestyle and retirement without
00:12:42.240 | having to look at what the stock market does every day because what the stock market's
00:12:45.100 | doing every day is for my six plus year money, not my money that I'm spending within the
00:12:50.200 | next five years.
00:12:51.200 | And as we know, even the greatest recessions, depressions that we've seen have really not
00:12:55.280 | lasted longer than that.
00:12:56.720 | I just say having three to five years of short term liquidity helps emotionally and also
00:13:01.100 | helps hedge against that sequence of returns risk, especially in the first few years of
00:13:05.280 | retirement.
00:13:06.280 | Certainly on average, if you hold a little bit more in cash or in short term, high quality
00:13:10.820 | bonds, the smaller investment return that you're going to get from that is going to
00:13:14.680 | drag on your portfolio, which means having a little bit less money that you'll be able
00:13:19.480 | to spend annually.
00:13:20.940 | And if you can have that extra cash cushion to make you feel more comfortable with your
00:13:27.500 | long term investing approach, generally, I think that can make some sense for those folks
00:13:32.300 | who are nervous about their long term investments.
00:13:36.100 | Now, it's not the most optimized approach.
00:13:39.900 | But again, if you can feel better about having that cash cushion that can make you stay the
00:13:45.360 | course with a balance of your investments, that can often make a lot of sense.
00:13:50.400 | People ask me all the time, "I'm scared about retiring, so I'm just going to work for one
00:13:53.380 | more year.
00:13:54.380 | I'm just going to work for a few more years."
00:13:55.880 | So if taking some type of bucketing approach like this, having a few years of cash to make
00:13:59.440 | you feel a little better and make you pull the trigger on retiring earlier, right, when
00:14:04.100 | you can actually quantitatively, rationally afford it, I think it's a really good way
00:14:08.300 | to keep people from just waiting a few more years to retire.
00:14:11.460 | Each year you wait to retire, that's fewer years of retirement.
00:14:13.860 | So think about what you're giving up.
00:14:15.420 | Again, you have to go beyond the numbers in these conversations.
00:14:18.860 | This question is from the Bogleheads forums, "I'm looking at retiring soon in my late 40s.
00:14:25.880 | I'm lucky enough to have a pension that is COLA protected from the military and very
00:14:31.160 | cheap health care for life.
00:14:33.240 | How does Cody go about calculating how much pension/health care that is worth in the future?"
00:14:39.600 | This question often comes up when you're going to choose a pension or take the lump sum.
00:14:44.120 | But when calculating a lump sum versus taking a pension, there are really two steps to this.
00:14:49.100 | The first thing that people make a mistake on when calculating whether they should take
00:14:52.660 | the lump sum or the pension is they divide the annual pension amount, the income amount,
00:14:58.060 | into the lump sum amount to figure out kind of what their "rate of return" would be.
00:15:02.700 | But this is one thing that we shouldn't do.
00:15:04.220 | You know, a few differences there is one, you're effectively looking at like annual
00:15:07.580 | yield of something, but by the way, at the end of life, that pension's gone, right?
00:15:12.400 | You don't have any more money at the end of that.
00:15:14.820 | So a lump sum, right, you can take the same amount of income possibly, and actually at
00:15:18.460 | the end of life, you still have money there that can be distributed to your heirs.
00:15:22.260 | Instead of just dividing the pension amount into the lump sum option, you need to use
00:15:26.740 | two time value of money calculations, TVM calculations, that require a few assumptions.
00:15:32.440 | So life expectancy assumptions, those things that we talked about earlier with rates of
00:15:36.340 | return inflation over time, you talked about COLA protection, you know, cost of living
00:15:40.300 | adjustments on your pension.
00:15:41.780 | A lot of pensions don't have that.
00:15:43.540 | So you have to figure out what is the value of that pension going to be if there isn't
00:15:46.620 | a COLA adjustment.
00:15:47.620 | There are two calculations that you would do.
00:15:49.820 | One is a present value calculation, which is saying, what is the present value of those
00:15:54.060 | future cash flows, assuming a certain life expectancy?
00:15:57.700 | If I were to end that pension at 95, how much would I have received from that?
00:16:01.700 | Effectively, you want to understand if I took the lump sum, what type of investment return,
00:16:07.220 | inflation adjusted, if it's not inflation adjusted pension that you're receiving, what
00:16:10.660 | would be the required rate of return needed to take that much out of the portfolio through
00:16:15.780 | the end of life and end with zero.
00:16:17.940 | In terms of using your financial calculator, the number of periods would be the number
00:16:21.820 | of years between taking the lump sum at the end of life.
00:16:25.100 | The interest rate would be really typically your inflation adjusted return or your rate
00:16:29.060 | of return for your investments.
00:16:31.140 | The lump sum pension calculations are effectively saying, hey, if I were to take the lump sum,
00:16:36.020 | would I be able to create effectively my own annuity that would quote unquote, outperform
00:16:41.380 | the pensions actuarial assumptions.
00:16:44.300 | When you're looking at the pension versus lump sum options, these weren't given to you
00:16:47.660 | as a challenge to say, which one do you think is best?
00:16:50.060 | Hopefully you choose the right one.
00:16:51.700 | These were all actuarially calculated by insurance companies that are way better at math than
00:16:55.140 | we are.
00:16:56.140 | So keep in mind that if you're comparing a lump sum versus a pension, they're actually
00:16:59.460 | equal in a way to them based on their assumptions, but it's up to you to figure out which assumptions
00:17:04.660 | do I have that would be different than the assumptions the insurance company is using.
00:17:08.820 | If I know I have a chronic health condition, that probably would make the case for possibly
00:17:12.980 | taking a lump sum because you're not going to live long enough to take advantage of the
00:17:16.500 | longevity that the insurance company might be assuming for you.
00:17:20.500 | Which assumptions might the insurance company be actuarially calculating and then which
00:17:25.300 | of those assumptions might actually be different for me?
00:17:28.060 | What are the things that I could plug into those assumptions?
00:17:30.140 | For example, chronic health conditions, whether or not I'm married, whether or not I want
00:17:34.260 | to leave money to future generations.
00:17:36.160 | So those are the assumptions that can change whether or not you take a lump sum or a pension.
00:17:40.300 | One thing I think about the annuitization versus lump sum distribution question, "Hey,
00:17:44.740 | should I take the lump sum or should I take the annuitization?"
00:17:48.020 | I am obsessively focused on that worst case.
00:17:53.180 | And for me, I think about how to best manage that worst case, which is you living forever
00:17:59.300 | and that annuitization option is going to do that.
00:18:01.460 | It's going to help manage that because as long as you're alive, you're going to get
00:18:04.500 | that annuity payment.
00:18:06.220 | Now, if you guess wrong and maybe you die the next day, that won't be great, but perhaps
00:18:12.260 | that risk isn't as financially impactful as living forever and running out of money.
00:18:16.580 | So my approach generally is to take that annuity option because it's a risk management approach,
00:18:22.180 | not necessarily the way they're going to transfer the most amount of money to your heirs, but
00:18:26.460 | certainly can help you have a higher quality of life during your lifetime.
00:18:30.620 | When you talk about beneficiary designations, when choosing between a lump sum and a pension,
00:18:34.180 | you also have to think, "Okay, is this money just for me or is this money that I want to
00:18:38.460 | last beyond my lifetime?"
00:18:40.420 | If I have a spouse, maybe I want to think about using the joint survivor pension option
00:18:44.280 | versus a single life annuity.
00:18:46.140 | Start to visualize what you want your retirement to look like and also what you want your generational
00:18:50.740 | wealth transfers to look like because that can also change whether or not you choose
00:18:55.100 | a lump sum versus a pension.
00:18:57.260 | And to add emotionally, behaviorally there, sometimes taking a pension can actually give
00:19:01.340 | you permission to spend.
00:19:03.100 | So if your only source of income in retirement is from your portfolio, you're probably going
00:19:07.060 | to be obsessed with your portfolio.
00:19:08.300 | When the market goes down, you're going to be like, "I don't know if I can afford going
00:19:11.220 | on that trip next year."
00:19:12.660 | So the last thing you want is to let the short-term volatility of the portfolio really dictate
00:19:17.140 | your spending in retirement.
00:19:18.460 | I know it's an important thing to consider, but the last thing you want is short-term
00:19:21.180 | stuff to affect your desired lifestyle.
00:19:23.260 | So yeah, sometimes taking the pension can provide that cushion behaviorally, emotionally
00:19:27.540 | for you to spend the money that you actually can't afford to spend.
00:19:30.460 | I always encourage folks to try and keep it simple as well.
00:19:34.020 | And man, does that annuitization option keep it simple?
00:19:36.860 | You get that deposit into your checking account monthly, every two weeks, whatever.
00:19:42.000 | That sure makes it easy.
00:19:43.500 | Another thing that I always encourage GIYers to think is not just about what investment
00:19:48.300 | approach is most interesting and fun for them when putting it together, but what sort of
00:19:51.860 | legacy plan you're going to be leaving your possibly less interested spouse.
00:19:56.860 | That annuitization option, that's pretty great for that non-financially interested spouse,
00:20:01.380 | because worst case, you pass, they're still going to get those regular deposits into that
00:20:06.340 | checking account.
00:20:07.620 | That can really be a great way to plan for legacy investing.
00:20:13.780 | This one is from Usain "WannaRetireEarly" from the MogulHeads forums who writes, "I'd
00:20:18.340 | like to better understand planning for health care, managing income to maximize Affordable
00:20:24.220 | Care Act subsidies, and also my kids will be in college, I want to be thinking about
00:20:28.500 | managing income to maximize subsidies for higher education."
00:20:33.620 | And for folks who want to learn more about how to manage the cost of health care in early
00:20:37.620 | retirement, we have a great Boglehead chapter series video on that.
00:20:42.380 | I'll link to that in the show notes for folks to check out.
00:20:46.580 | So managing health care in early retirement before Medicare actually isn't as difficult
00:20:50.660 | as you might think.
00:20:51.660 | I know there's a lot of concern about the uncertainty of future health care costs.
00:20:55.580 | There's like seven or eight different options for health care in early retirement.
00:20:58.300 | But since you mentioned maximizing subsidies, you're talking about this premium tax credit.
00:21:02.200 | So the premium tax credit for health coverage before Medicare and student financial aid
00:21:06.100 | are two major forms of subsidies, which may be worth prioritizing in early retirement.
00:21:11.300 | So if a family is able to maintain its desired lifestyle in early retirement, due to control
00:21:15.580 | over sources of taxable income, this usually means having a pretty healthy balance between
00:21:19.900 | taxable pre-tax and tax-free accounts.
00:21:22.780 | People on the path to early retirement, they'd be much better off creating some diversification
00:21:26.820 | in their asset location.
00:21:28.680 | If a family is able to maintain that desired lifestyle and have control over sources of
00:21:32.820 | taxable income in early retirement, it's definitely worth running those scenarios against the
00:21:36.620 | opportunity cost of implementing other early retirement strategies, such as Roth conversions
00:21:42.140 | to maximize after-tax wealth.
00:21:44.460 | Don't let your health care subsidies or the financial aid for a kid completely run your
00:21:49.540 | financial plan.
00:21:50.700 | They are important variables to consider and to plug into the numbers, but don't let that
00:21:54.600 | rule all of your decisions.
00:21:56.460 | So your ability to maintain your desired lifestyle in retirement, I think that should be a prioritization.
00:22:00.980 | And then secondary to that should be any type of tax planning strategies that's worth doing
00:22:06.020 | sometimes, but just make sure that's not prioritized over the things that are much more important
00:22:10.260 | in early retirement.
00:22:11.260 | Cote, you mentioned doing partial Roth conversions in early retirement, a pretty common strategy.
00:22:16.740 | However, that's going to generate some taxable income.
00:22:20.420 | And as that income increases, that means now we're looking at less subsidies for health
00:22:25.940 | care through the Affordable Care Act.
00:22:28.540 | What's your preference doing partial Roth conversions or keeping income low to optimize
00:22:34.580 | for subsidies for health insurance in early retirement?
00:22:37.500 | Oh, that's a tricky and great question.
00:22:40.980 | The big thing here, one reason that you might want to consider maximizing those subsidies
00:22:46.180 | is that the premium tax credit is that it's a credit.
00:22:49.080 | It's not a deduction.
00:22:50.080 | A credit is a dollar for dollar return of taxes owed, taxes paid.
00:22:54.820 | So this is very different from looking at the effect on Irma or the taxation of Social
00:22:59.300 | Security, things like that.
00:23:01.140 | These tax credits are substantial.
00:23:02.780 | I actually just talked with a family member yesterday that is receiving $460 a month of
00:23:08.540 | premiums completely for free.
00:23:10.700 | I think this is one of those where you really have to understand the numbers.
00:23:13.220 | You need to go to healthcare.gov/c-plans to really look at what is health care cost on
00:23:19.660 | the health insurance marketplace based on where you live.
00:23:22.060 | You type in your zip code.
00:23:23.460 | You also type in what's your anticipated modified adjusted gross income, in this case, in early
00:23:28.620 | retirement.
00:23:29.620 | It's going to show you what your estimated premium tax credit could be.
00:23:33.700 | And what you can do, it's really nice on that website, you can just say, well, okay, well,
00:23:36.660 | what if my income is $80,000 instead of $60,000 a year?
00:23:39.620 | How does that affect my premium?
00:23:41.260 | So these are based on the federal poverty level up to 400% of the federal poverty level.
00:23:46.380 | It's broken that ceiling, at least temporarily, for premium tax credits.
00:23:49.700 | You have to understand what is the credit I'm going to receive.
00:23:52.740 | If you don't have an estimate of what those credits might be, then you want to make sure
00:23:56.220 | you do that first.
00:23:57.220 | Once you understand what those credits may be, you can start filling in those marginal
00:24:01.220 | tax brackets, Roth conversions.
00:24:02.900 | Say, what if I were to convert up the top of the 10%, 12%, 22%, 24% tax brackets in
00:24:08.060 | terms of Roth conversions?
00:24:09.540 | And then what would that level of modified adjusted gross income do to those premium
00:24:13.540 | tax credits?
00:24:15.100 | A lot of people come to me and they say, okay, how much should I convert to Roth over the
00:24:18.300 | next 10 years?
00:24:19.780 | Don't make 10 years worth of assumptions here.
00:24:22.180 | Take one year at a time.
00:24:24.020 | So at the beginning of each year, at the end of each year, determine how much am I going
00:24:27.540 | to convert.
00:24:28.540 | And this year, am I going to prioritize premium tax credit or am I going to prioritize maximizing
00:24:33.260 | after-tax wealth with Roth conversions?
00:24:35.700 | I do it in mid-November every year for Roth conversions.
00:24:39.300 | Keep it simple, one year at a time, and it'll take some of that anxiety out of the way.
00:24:44.180 | Doing those calculations in mid-November certainly makes sense because you'll have a better idea
00:24:47.780 | closer to your end what your taxable income is going to be for the year.
00:24:52.340 | Diplo Investor from Boglovs Farms writes, "We are four to five years out from retiring
00:24:56.700 | in our early to mid fifties, and we will both have decent federal pensions.
00:25:01.860 | Only a question about what order to withdraw from, TSP or Roth IRA taxable when RMDs are
00:25:07.860 | still long, long way off."
00:25:11.380 | The typical order of operations for early retirement distributions is first starting
00:25:16.740 | with your checking and savings accounts.
00:25:19.340 | Taking money out of those accounts, there's no age requirement, there's no taxes to take
00:25:23.020 | money out.
00:25:24.220 | Then you go to your taxable brokerage accounts.
00:25:26.700 | These are the accounts that are holding those investments that may offer qualified dividends
00:25:29.860 | and long-term capital gains tax treatment with no early withdrawal penalty.
00:25:34.580 | Savings, checking accounts, and then taxable brokerage accounts.
00:25:38.020 | These are all of the accounts that provide what I call cash flow flexibility, but they
00:25:41.580 | are taxable along the way.
00:25:43.500 | So that income and dividend and capital gains distributions in the taxable brokerage accounts,
00:25:47.380 | they're taxable along the way, even if you don't take money out of the accounts.
00:25:50.500 | But the good thing about those accounts is the money you can actually take out of the
00:25:53.180 | accounts are not taxable.
00:25:55.260 | Then after the taxable brokerage accounts, then we move on to the pre-tax retirement
00:25:58.740 | accounts.
00:25:59.740 | These are the traditional IRAs, traditional 401Ks, 403Bs, 457s, and so forth.
00:26:05.020 | If you are retiring early, right before 59 and a half, you'd have to be using some sort
00:26:09.380 | of early retirement distribution strategy.
00:26:11.740 | So those may include what are called substantially equal periodic payments.
00:26:15.900 | Some people call it the SEPP, the 72T payments.
00:26:19.940 | There's the rule of 55, which is you do retire from that employer in or after the year you
00:26:24.760 | turn age 55, and that's specific to that employer's retirement plan.
00:26:29.300 | Some people use Roth conversion ladders.
00:26:31.440 | The reason they're called ladders is because there's a five-year holding period for Roth
00:26:35.340 | conversions before 59 and a half to avoid that 10% additional tax, also sometimes called
00:26:41.060 | the tax penalty.
00:26:42.380 | So after you've taken money from your savings, checkings, taxable brokerage accounts, and
00:26:46.060 | pre-tax accounts, then lastly, usually as a last resort, those tax-free accounts such
00:26:50.740 | as Roth IRAs or HSAs.
00:26:52.980 | The reason those are typically used last is because their highest and best use is long-term
00:26:57.380 | tax-free growth that we all love.
00:26:59.540 | So usually letting those accounts grow long-term as long as possible is typical order of operations.
00:27:05.020 | So once your desired living expenses are met in early retirement, going through that order
00:27:09.060 | of operations, then you would say, "Okay, maybe we need to do some gradual Roth conversions
00:27:13.460 | on top of that to reduce those future RMDs," even if they're a long way off, as you mentioned
00:27:18.220 | in your question.
00:27:19.220 | Mike Piper talks about this question at the last BogleVs conference in 2022, "What accounts
00:27:27.820 | should I spend from in retirement?"
00:27:30.580 | There's a great video you can check out.
00:27:32.420 | I'll link to that in the show notes for our listeners.
00:27:36.300 | User name Introdon from the BogleVs forums writes, "I have VYM in my IRA.
00:27:42.540 | Does it make sense to have an investment that gives qualified dividends taxed at the 23.8%
00:27:48.020 | rate?
00:27:49.020 | Will RMDs kick in, as I will most likely stay in a high tax bracket in retirement?"
00:27:56.100 | Since you mentioned you're in a high tax bracket, well, most likely stay there.
00:27:59.900 | Qualified dividends, if they were held within a taxable brokerage account, those qualified
00:28:03.100 | dividends would actually be taxed favorable tax treatment.
00:28:06.660 | But for you in a high tax bracket, you're looking at either the 15% or 20% qualified
00:28:10.900 | dividends or long-term capital gains tax treatment, plus a 3.8% net investment income tax.
00:28:15.900 | So a total of 23.8% if held within the taxable brokerage account versus being tax deferred,
00:28:22.620 | but potentially taxed at a much higher marginal tax rate, which could be 24, 32, 35, 37% when
00:28:29.700 | distributed from the IRA.
00:28:31.420 | I guess the first thing is usually you want to take advantage of favorable qualified tax
00:28:35.620 | rates on those qualified dividends.
00:28:38.500 | Secondary to that, though, I would say for people with high income, I prefer not to purchase
00:28:42.700 | high income paying investments in general, whether equity or fixed income, but rather
00:28:47.380 | take a total of return approach.
00:28:49.320 | So on average, I prefer to keep the equities within the taxable brokerage accounts and
00:28:53.460 | Roth IRAs, right, because they receive that favorable tax treatment.
00:28:57.100 | I know that you're in a higher bracket, but actually effectively the lowest capital gains
00:29:00.700 | tax rate is 0%.
00:29:02.520 | So some people might call that tax gain harvesting rather than tax loss harvesting.
00:29:07.320 | Usually I want to keep equities within the taxable brokerage accounts.
00:29:10.240 | If there is fixed income, keep the fixed income within the pre-tax retirement account.
00:29:13.920 | So based on your circumstance being in a high tax bracket, I'm not a big chaser of dividend
00:29:18.360 | yield to begin with.
00:29:19.480 | I'd most likely have my qualified dividends in the place where it's most favorable, which
00:29:23.480 | would be the taxable brokerage account, and then keep my IRA invested for the less favorable
00:29:28.260 | tax consequences.
00:29:30.580 | Speaking of dividend investing, we interviewed Vanguard's Colleen Giaconetti on episode 26
00:29:36.080 | of the Booklet Edge live show, where we talk about just this, dividend investing, investing
00:29:40.180 | for income.
00:29:41.620 | And Colleen sums it up as saying, "Investing for income means more risk and more taxes."
00:29:48.220 | I'll link to that in the show notes for our listeners.
00:29:50.580 | They can check that out.
00:29:53.120 | This question is from Dennis Lee from Facebook, who asks, "Should a person even bother trying
00:30:00.300 | to do a backdoor Roth if they have a fair amount of money in a traditional IRA from
00:30:04.540 | a previous 401k rollover?
00:30:06.500 | I've already tried to see if I can roll these into my solo 401k, and thus far I cannot."
00:30:12.180 | There's really two parts here.
00:30:14.180 | The first is, should a person even try bothering doing a backdoor Roth if they have a fair
00:30:17.980 | amount of pre-tax money specifically in a traditional IRA from a previous 401k rollover?
00:30:24.060 | So if you do have access to a workplace retirement plan that's not an IRA, like a 401k, might
00:30:29.540 | allow incoming rollovers of that pre-tax portion.
00:30:32.660 | This question is really talking about that pro-rata rule.
00:30:34.540 | If you do a Roth conversion, the coffee and the cream is mixed within your traditional
00:30:38.460 | IRA, some pre-tax money, some after-tax cost basis, you're going to have this pro-rata
00:30:42.620 | calculation that you're actually going to end up paying more taxes to do that Roth conversion.
00:30:47.340 | So first off, if you do have access to a qualified retirement plan, such as a 401k, that allows
00:30:52.420 | incoming rollovers, a lot of people do roll over the pre-tax portion into that.
00:30:56.740 | So they're only left with their after-tax portion that can be converted tax-free.
00:31:00.760 | That requires that pre-tax portion to be rolled into the typically a 401k by December 31st
00:31:05.660 | of the Roth conversion year.
00:31:07.540 | The second part of this is you mentioned that you have a solo 401k and that you cannot roll
00:31:11.280 | over your IRA into it.
00:31:13.380 | Actually, in the last few years, some solo 401k plans do allow incoming IRA rollovers.
00:31:19.620 | Vanguard might be one of those that now allows incoming IRA rollovers into a solo 401k, also
00:31:24.980 | called a self-employed 401k.
00:31:27.460 | But keep in mind, this is very plan specific.
00:31:30.380 | So you mentioned that it's not available in your solo 401k, but it might be available
00:31:34.060 | in another solo 401k plan.
00:31:35.900 | Really, look at the plan rules, verify if that's accurate.
00:31:39.140 | If you cannot avoid the pro-rata taxation, it's typically not worth it if you have significant
00:31:44.220 | pre-tax balances.
00:31:45.900 | Sometimes it's better to just avoid that hassle, we call it return on hassle.
00:31:50.120 | So instead of putting money into there trying to do the backdoor Roth IRA, go ahead and
00:31:53.900 | just put that money into a taxable brokerage account instead.
00:31:56.540 | There's a lot of great benefits to a taxable brokerage account.
00:31:59.180 | I think the taxable brokerage account is just like one step under a Roth IRA.
00:32:02.980 | There are so many incredible benefits of a taxable brokerage account, especially for
00:32:06.220 | early retirees, that if you're going to be subject to significant pro-rata taxation of
00:32:11.140 | the backdoor Roth IRA, I'd probably just say skip it.
00:32:14.820 | This question comes from username Baddy Natty from the Bogleheads forums who writes, "When
00:32:21.460 | you encounter families who are planning to stop working in about five years, but already
00:32:25.820 | have the savings to retire now, do you put together a plan to spend more than usual over
00:32:30.820 | the next five years to start maximizing experiences, memories, and happiness?"
00:32:38.100 | Absolutely yes.
00:32:39.420 | Especially once a family is financially independent with the ability to work because they want
00:32:43.340 | to, not because they have to, they can significantly expand their current desired lifestyle while
00:32:48.780 | they're working.
00:32:50.420 | This question mentions a family who has the savings to retire now, but they plan to stop
00:32:55.500 | working in about five years.
00:32:57.420 | If they have enough savings to retire now, I'd really want to understand why five years.
00:33:00.780 | Is there something they're anxious about?
00:33:02.740 | Maybe a limited belief that they have that they must do five more years because that's
00:33:06.180 | how long their dad worked or their mom worked.
00:33:08.220 | There might be some behavioral, emotional things behind the scenes to really figure
00:33:10.980 | out why five years.
00:33:12.180 | If you have enough money to retire now, why are you waiting?
00:33:15.500 | One great exercise that I do with clients, especially what you talk about here, is even
00:33:20.380 | while they're working, I created this blank calendar exercise to help pre-retirees recognize
00:33:26.200 | how they want to spend their time and energy as a family.
00:33:29.980 | Imagine you have a seven-day, 24-hour blank calendar.
00:33:33.540 | You take it as a family and you fill it out and say, "If we had a blank calendar, how
00:33:37.260 | do we want to spend time as a family?"
00:33:39.340 | They fill out that calendar.
00:33:41.540 | Now, how can we plug in the numbers to this?
00:33:45.100 | Some things they said, "Hey, on Monday and Wednesday, we want to do a picnic at the park.
00:33:48.780 | We want to go pick up sub sandwiches from our favorite sub shop down the street."
00:33:52.420 | The first question I ask is, "Is it possible to do that even now while you're still working?"
00:33:57.700 | Because a lot of the things that we want to do more of in retirement, there's actually
00:34:01.120 | nothing stopping us from doing it now.
00:34:03.260 | But we somehow have this limited belief that, "Oh, you have to wait until you retire before
00:34:07.540 | you do the things you want to do."
00:34:09.100 | Cody, I love that calendar exercise.
00:34:11.820 | That is phenomenal.
00:34:14.200 | This question is from a user named Ariel Wombat from the Booklets Forums who writes, "I'm
00:34:18.340 | about two years into early retirement in my mid 40s.
00:34:22.100 | What unknown unknowns do as fire clients experience five to 10 years into early retirement that
00:34:27.100 | they didn't anticipate financially or otherwise?"
00:34:31.180 | First of all, as I mentioned before, physical, mental, spiritual, relational, and financial
00:34:35.460 | wellness are interrelated.
00:34:37.540 | Many early retirees don't realize until they retire that they've actually sacrificed their
00:34:42.340 | physical, mental, spiritual, and relational wellness for the sake of financial health
00:34:46.420 | along the way and aren't actually able to enjoy retirement as much as they expected.
00:34:51.620 | So they have all the money they need in the world, but they don't have anybody to spend
00:34:54.260 | it with.
00:34:55.260 | They don't have the mental capacity to spend it in a way that provides a lack of anxiety
00:34:59.700 | for them.
00:35:00.700 | It provides joy and not just more stress.
00:35:03.540 | Most people who plan to retire early don't consider the potential reality of becoming
00:35:07.880 | a caregiver in the future for other family members, their parents, their siblings.
00:35:13.400 | So we assume that early retirement will look the same in year 10 as it does in year two,
00:35:18.620 | but it's going to be so different than what you expected.
00:35:21.100 | To go along with that, think about what you were like and what your life was like 10 years
00:35:25.420 | ago.
00:35:26.580 | If you think about how different you were and how different life was 10 years ago, but
00:35:30.020 | yet we somehow assume that 10 years from now, our life is going to look very similar to
00:35:35.340 | what it is today.
00:35:36.340 | And we're going to be the same person in 10 years that we are today.
00:35:38.820 | Once you realize that the way you assume you're going to be in the future is going to be completely
00:35:41.780 | different in reality, the biggest unknown, unknown that you're going to realize later
00:35:46.180 | on is that you're going to be a different person and you're also going to be caring
00:35:49.200 | differently for people.
00:35:50.540 | A lot of people retiring early, their parents are actually going into traditional retirement.
00:35:54.500 | Somebody's retiring at 40, their parents might be in their 60s or 70s retired.
00:35:59.020 | And there might be a time in terms of long-term care, in terms of cognitive decline, that
00:36:04.100 | you might actually be spending not just your time and energy, but also your finances helping
00:36:07.980 | to support other people.
00:36:09.780 | So before you retire early, especially financially, think about, will I need to financially support
00:36:14.500 | somebody in the future, including my own parents or my children?
00:36:19.860 | Even by the way, when my children are adults, there are plenty of adult children who still
00:36:23.980 | need time, energy, and financial resources from their parents.
00:36:28.020 | What's IRR?
00:36:30.260 | From the Bogolets Forums writes, "Has Cody seen any trends with either successful or
00:36:35.780 | unsuccessful FIRE folks trying to get to FIRE?"
00:36:40.700 | There's actually a trend within the FIRE community of discovering within one to two years of
00:36:44.420 | early retirement that they actually miss aspects of working.
00:36:48.140 | But thankfully, now that they have command over the who, what, where, when, why and how
00:36:53.200 | work is done, some early retirees end up actually going back to work, usually often as entrepreneurs
00:36:59.180 | as well.
00:37:00.180 | They end up making more money when they're financially independent than when they had
00:37:03.580 | to work.
00:37:04.660 | I've also seen patterns within the FIRE community of being financially successful, but unsuccessful
00:37:09.980 | in the non-financial areas.
00:37:11.700 | So you talk about people being unsuccessfully FIRE, we're typically thinking about the financial
00:37:16.980 | part of FIRE.
00:37:18.260 | I've seen a lot of people who are successful financially, but they're unsuccessful in those
00:37:21.900 | other ways that we've talked about, that they have all the money in the world, but every
00:37:25.940 | other part of their life is crumbling apart.
00:37:29.220 | So again, that's just one more reason that on the path to FIRE, it's not just the path
00:37:33.180 | to FIRE, it's the path to continuing healthy relationships, continuing health, physical
00:37:38.660 | and mental.
00:37:39.660 | A lot of times we've been kind of plugging our life into the numbers rather than plugging
00:37:43.420 | the numbers into our life.
00:37:45.100 | So we're starting with the spreadsheet and saying, how can I live given my spreadsheet
00:37:49.500 | rather than how do I want to live and how can my spreadsheet support that?
00:37:53.360 | So on the path to and through early retirement, ask yourself, what do I visualize my ideal
00:37:58.740 | life looking like, and then only then plug in the numbers and say, "Hey, is that actually
00:38:02.700 | possible?"
00:38:03.980 | Rather than saying, "I have this much money, what can I do with it?"
00:38:07.020 | Most of the questions we receive are financial, where in reality, in retirement, most of your
00:38:12.040 | time is spent doing non-financial things, that by the way, just happen to require money
00:38:16.340 | sometimes.
00:38:17.340 | Absolutely.
00:38:18.340 | Money is a tool for our personal goals.
00:38:22.300 | It is not the end goal.
00:38:24.980 | Colm Stretch from the Vogelheids Forums writes, and he's got a bunch of questions here.
00:38:29.700 | He writes, "Great topic, five years before retirement, should one change portfolio asset
00:38:36.020 | allocation?"
00:38:37.020 | I'm going to say yes to that.
00:38:39.460 | Usually within five years before retirement, you're really starting to think about creating
00:38:42.780 | some short-term liquidity.
00:38:44.380 | Some people choose like one, two, three years of short-term liquidity.
00:38:48.180 | As mentioned before, three to five years of de-risking or de-risking the total portfolio,
00:38:53.100 | if you're using that approach, you might have been 100% equity during your whole accumulation.
00:38:58.100 | But if you're five years until retirement, you just start thinking about de-risking the
00:39:01.820 | total portfolio, whether just changing that overall asset allocation down from 100% equity
00:39:07.060 | or 80%, depending on your other income sources, certainly.
00:39:10.740 | Start thinking ahead in five years, how much income will I need for my portfolio to supplement
00:39:15.380 | my other forms of income?
00:39:16.980 | And start really timing out, they call it asset liability matching.
00:39:20.580 | What are my future liabilities going to be?
00:39:22.420 | How can I turn my assets into income over the next five years?
00:39:26.420 | So that usually means creating some type of a bond ladder or just starting to put some
00:39:30.140 | bond allocation within your total portfolio.
00:39:32.620 | So yes, five years before retirement, I would change the asset allocation, assuming that
00:39:37.140 | you hadn't changed it years before.
00:39:40.060 | And I'll link to the Bogleheads wiki that talks about some basic considerations for
00:39:44.960 | investing and taking the right amount of risk.
00:39:47.340 | That is part of it.
00:39:48.560 | Five years before retirement, you certainly want to be taking the right amount of risk.
00:39:51.680 | Not too much, not too little.
00:39:53.840 | Question number two, should I, five years before retirement, build a cash balance or
00:39:57.860 | Roth ladder for early retirement?
00:40:01.260 | So to start, if you're not familiar, a Roth ladder, they're talking about a Roth conversion
00:40:04.940 | ladder.
00:40:05.940 | So before 59 and a half, if you take money out of a qualified retirement plan before
00:40:09.740 | 59 and a half, there's an additional 10% tax.
00:40:14.580 | When you do a taxable Roth conversion from a pre-tax retirement account into a Roth tax-free
00:40:19.980 | retirement account, you have to wait five years before you can take that conversion
00:40:24.540 | amount back out to avoid that 10% penalty.
00:40:27.740 | So the government doesn't want you just converting that money and taking it out right away.
00:40:31.380 | They want to kind of penalize you for taking money out before traditional retirement ages
00:40:35.240 | of 59 and a half plus.
00:40:37.460 | Should we build a cash balance or a Roth conversion ladder in early retirement?
00:40:41.120 | First of all, there's a misconception about the Roth conversion ladder.
00:40:44.420 | Usually when somebody is using a Roth conversion ladder, they're usually only thinking about
00:40:47.780 | their future living expenses five years from now.
00:40:50.680 | They're not thinking about also having to cover the tax liabilities from initiating
00:40:55.320 | those Roth conversions themselves.
00:40:57.180 | So when you're doing a Roth conversion in early retirement before 59 and a half, you
00:41:01.940 | should not withhold the taxes from the conversions themselves because that portion that's withheld
00:41:07.700 | for taxes would be subject to the 10% penalty before 59 and a half.
00:41:12.100 | So before early retirement, you typically want at least five years of liquidity to cover
00:41:17.340 | not just your living expenses, but also the tax liabilities needed to pay the taxes on
00:41:22.660 | your Roth conversions.
00:41:24.380 | So if you're going to do a Roth conversion ladder in early retirement before 59 and a
00:41:28.380 | half, you need enough cash to sustain yourself for at least five years of living expenses,
00:41:33.460 | but also the five years of tax liabilities to make those conversions.
00:41:38.300 | Question number three, while still in high marginal tax rate years, should one stop contributing
00:41:43.460 | to tax deferred accounts to save more cash or save in Roth accounts?
00:41:50.840 | So thinking about marginal versus effective tax rates here, marginal being, you know,
00:41:55.580 | what's the tax rate on your last dollar earned?
00:41:57.780 | That's the tax bracket we talk about 10, 12, 22, 24, 32, 35, 37.
00:42:02.580 | Those are marginal tax rates.
00:42:04.180 | But you also have what's called like an effective average tax rate.
00:42:08.220 | So when you're contributing during your high marginal tax years, it's typically best to
00:42:12.700 | contribute pre-tax because you're either deducting or excluding that income at your highest marginal
00:42:18.220 | tax rate.
00:42:19.680 | But in retirement, especially early retirement, you're probably distributing that income at
00:42:23.740 | much lower marginal tax rates or just a much lower effective average tax rate.
00:42:28.660 | So in terms of this question, because we have the detail of being a high marginal tax rate
00:42:32.820 | year, usually you're going to want to contribute tax deferred rather than Roth, unless you're
00:42:37.820 | talking about, you know, the backdoor Roth, which is for high earners.
00:42:41.460 | So typically you want to max out your pre-tax retirement accounts and higher earning years,
00:42:45.500 | then focus on building up taxable brokerage accounts.
00:42:48.060 | So the backdoor and the mega backdoor Roths are great, but only if you don't have to touch
00:42:52.600 | the earnings in those accounts in early retirement, because you have to wait until 59 and a half
00:42:57.260 | to touch those earnings without tax or penalty.
00:43:00.020 | The taxable brokerage account, again, is so undervalued within the FIRE community.
00:43:03.920 | So once you max out those pre-tax accounts, think twice about whether or not you want
00:43:07.900 | to put money in Roth, or just build up some additional flexibility in cash and your taxable
00:43:12.140 | brokerage accounts, which have no 10% penalty for withdrawal before 59 and a half.
00:43:17.820 | Credit to Jeff Levine for sharing something during a webinar he did for Team Kitsis once.
00:43:23.780 | And Jeff made the point that sometimes it's just simpler to pay a 10% tax, quote unquote,
00:43:29.300 | penalty.
00:43:30.300 | So if this guy is in that higher marginal tax rate, let's say the 37% bracket, he makes
00:43:36.220 | that contribution today, gets that 37% deduction.
00:43:41.860 | Now he's in retirement, he's going to be in the 0% bracket.
00:43:45.140 | So 0% bracket plus 10% penalty, that is still a 27% savings compared to when he put that
00:43:52.140 | money in, compared to saving at the 37% rate today.
00:43:56.340 | Yeah.
00:43:57.340 | And to add to that, I think a lot of people start getting really excited about Roth at
00:44:00.900 | the end of their working career, and they start Roth conversions too early, or they
00:44:04.580 | start contributing to Roth too early.
00:44:07.220 | I would say that if you're in your highest earning years and you're planning to retire
00:44:09.820 | early, and you're going to have lots of years to spread out the taxes of those conversions,
00:44:14.580 | you're much better off doing a traditional pre-tax contribution, not a Roth contribution.
00:44:19.940 | And then a huge question for number four from Homestretch, how to plan for claiming Social
00:44:24.260 | Security, early retirement healthcare, Roth conversions, minimize IRMA, and higher marginal
00:44:30.420 | tax rates in later retirement after the start of RMDs.
00:44:34.640 | I feel like we can do a whole episode on just that one question.
00:44:37.340 | Yeah.
00:44:38.340 | I love it.
00:44:39.340 | So first of all, I did one note here is that the start of RMDs would usually happen after
00:44:43.080 | claiming Social Security.
00:44:44.660 | But just to make it a simple answer here, if you retire before paying into Social Security
00:44:49.180 | for 35 years, you'll likely see decreased retirement benefits versus what your Social
00:44:54.420 | Security statement says before you retire.
00:44:57.040 | Your Social Security statement assumes that you continue earning what you did last year
00:45:01.200 | through the age you claim benefits, whether it's 62, 67, full retirement age, 70, et cetera.
00:45:06.720 | In terms of IRMA, IRMA is an increase in your Medicare Part B and D premiums.
00:45:12.900 | Do not let IRMA be the tail that wags the dog.
00:45:16.320 | If you're paying increased Medicare premiums through IRMA, that's a good problem to have
00:45:20.560 | because that means that your modified adjusted gross income is pretty high.
00:45:24.320 | You can definitely afford the IRMA if your income is that high.
00:45:27.420 | It is one of those shelves, right, where you don't want to go just a little bit over one
00:45:30.860 | of those shelves.
00:45:31.860 | But don't let IRMA be a big concern in retirement.
00:45:35.420 | And then lastly, early retirement health care.
00:45:37.340 | As we mentioned before, the health insurance marketplace, healthcare.gov/c-plans, plus
00:45:43.460 | the use of those premium tax credits, if you can control your modified adjusted gross income
00:45:47.640 | in early retirement, that is really the best way to start with thinking about health care
00:45:52.420 | in early retirement.
00:45:54.060 | And Cody mentioned, if you're looking at your social security statement for the benefit
00:45:58.660 | you may expect when you retire, he pointed out, you've got to work until that year to
00:46:03.700 | get a better idea of the ultimate social security benefit you might expect if retiring early.
00:46:09.660 | You want to check out ssa.tools.
00:46:12.420 | It's a pretty neat tool that helps you determine your future social security benefit amount,
00:46:17.700 | where it lets you toggle your future income and how long you plan to work for.
00:46:23.420 | And it shows you what benefit you can expect at different claiming ages, pretty neat tool
00:46:28.300 | to check out.
00:46:29.300 | And then lastly, five years before retirement, should one update estate planning docs?
00:46:35.820 | Simple answer here.
00:46:36.820 | I think that you should review these documents every few years, and when any significant
00:46:41.420 | change occurs, such as a birth, a death, a move, a marriage, a divorce, or a changing
00:46:47.260 | family relationship.
00:46:49.140 | Once you have, let's say, you know, your wills, your powers of attorney, your trust in place,
00:46:52.780 | review those every few years, if kind of life is normal.
00:46:54.980 | But if any of those significant changes happen, that's when you should at least review your
00:46:59.120 | estate documents to figure out whether or not they should be updated.
00:47:01.620 | So it's not necessarily five years before retirement, update your estate documents,
00:47:05.500 | just you should be doing this regularly throughout your life.
00:47:09.460 | Absolutely well said, Cody.
00:47:11.740 | Private ID from the Vogelites forums writes, when to start social security for the lower
00:47:16.020 | earner?
00:47:17.560 | So I'm assuming you're saying a lower earner means that there's spouses.
00:47:21.020 | One was a higher earner, which means that they're going to have a higher benefit and
00:47:24.020 | a lower earner, which means they're going to have a lower social security retirement
00:47:27.660 | benefit.
00:47:28.660 | In general, the lower earner typically is going to claim earlier if they do claim earlier.
00:47:33.340 | That's because once one of the spouses dies, the surviving spouse will continue the higher
00:47:38.340 | of the two benefits.
00:47:39.700 | So the lower earner will typically claim earlier.
00:47:42.500 | But with that said, there are many variables that exist here, including life expectancy,
00:47:47.060 | age difference, other income sources, multigenerational wealth objectives, charitable giving intentions.
00:47:53.140 | There's a lot that goes into this question.
00:47:54.940 | But just to tell you in general, yes, if anybody is going to claim earlier, it's typically
00:47:59.740 | going to be the lower earner.
00:48:01.840 | And unsaid by this question and unsaid by Cody is that generally for the higher earner,
00:48:06.740 | you're going to delay until 70.
00:48:08.820 | That's going to give that lower earner, if they live longer than the higher earner at
00:48:13.620 | higher earners benefit.
00:48:15.780 | That's a great point, John.
00:48:17.100 | So that begs the question, when does the lower earner claim?
00:48:20.500 | Mike Piper and I talked about this on episode 23 of the Booklet's live show.
00:48:23.900 | You can check that out.
00:48:24.900 | I will link to that in the show notes.
00:48:27.540 | And then Mike Piper has a pretty neat tool, Open Social Security, that allows you to play
00:48:31.500 | with different claiming strategies.
00:48:34.460 | One to have that lower earner claim earlier versus later.
00:48:37.580 | And that can show you the dollar amount difference you might expect for claiming earlier versus
00:48:43.220 | later.
00:48:44.220 | That will help your household decide what might be the right strategy for you.
00:48:49.580 | I'll link to that Open Social Security calculator by Mike Piper in the show notes as well as
00:48:54.520 | that podcast episode for folks to check out to learn more.
00:48:59.020 | Private ID goes on to say question number three, insurance, my company's retirement
00:49:02.900 | plan or ACA with potential subsidies.
00:49:05.820 | Yeah.
00:49:06.820 | So continuing coverage through your company's plan.
00:49:10.280 | Sometimes they might offer COBRA up to 18 months typically.
00:49:13.940 | Typically that group plan may provide better coverage, but is typically really expensive
00:49:19.260 | because not only are you paying the employee side that you were paying before, but now
00:49:22.580 | you're taking over the employer premiums too.
00:49:25.260 | So you're typically paying 102% of the combined employee employer premiums.
00:49:30.460 | So some people stay on COBRA for a little while.
00:49:32.620 | Maybe they've already hit their max out of pocket or they're deductible for the year.
00:49:36.060 | They want to continue at least the rest of that year with their current health plan.
00:49:38.820 | But otherwise, if you do have control over taxable income in early retirement, especially
00:49:43.580 | the Affordable Care Act, the ACAs they talk about, that's the healthcare marketplace with
00:49:47.540 | those premium tax credits is usually the better bet.
00:49:50.620 | Just keep in mind that it's not just about the money.
00:49:52.620 | You know, think about your healthcare needs.
00:49:54.700 | Think about your prescription drugs.
00:49:56.540 | Also, don't just jump to doing a high deductible health plan just because you've heard that's
00:50:00.780 | a thing worth doing.
00:50:01.780 | A high deductible health plan with an HSA is a great tool, but only if it actually makes
00:50:05.600 | sense for your health specifically and your family's health.
00:50:09.100 | One benefit to using workplace plan is that you don't have to worry about keeping your
00:50:12.660 | income low to maximize those ACA subsidies, which leaves you a better opportunity for
00:50:18.060 | those partial Roth conversions.
00:50:19.620 | Yeah, that's a great point.
00:50:21.380 | And also, just another reminder that some people wish COBRA could last forever, but
00:50:25.300 | typically, yes, again, it's typically only limited to 18 months.
00:50:29.680 | This question is from Work to Live from the Bullhead's Forums who writes, "My question
00:50:34.020 | is how to plan for and estimate tax expenses in retirement given those of us who have been
00:50:40.020 | placing retirement assets in a diversified basket of tax-free, tax-averted, and taxable
00:50:44.740 | accounts.
00:50:45.740 | I have no idea to even begin planning for my tax expenses."
00:50:51.500 | I recommend learning the difference simply between marginal and effective tax rates,
00:50:56.500 | the difference between adjusted gross income, AGI, and taxable income, right?
00:51:01.420 | So that's really understanding how the standard deduction works, and the benefits of taxable
00:51:05.580 | brokerage accounts, so including the qualified dividends, the long-term capital gain tax
00:51:09.900 | treatment, tax-optimized charitable giving, for example, itemized deductions, the use
00:51:14.420 | of donor-advised funds, things like that.
00:51:16.660 | Once you understand the tax formula and consider your distribution order of operations that
00:51:21.060 | we covered earlier, that typically is going to include the taxable, pre-tax, and then
00:51:25.220 | tax-free accounts.
00:51:26.860 | Then you can gain some clarity around your average effective retirement tax rate.
00:51:31.120 | Most of the assumptions that we make will actually not come true because most of the
00:51:34.740 | things that we optimize for are out of our control rather than things that are within
00:51:38.540 | our control.
00:51:39.540 | So try not to over-optimize and estimate what your electricity bill will be in 30 years
00:51:43.900 | from now, for example.
00:51:45.260 | Don't optimize for the 20% leaving the 80% on the table.
00:51:49.020 | So visualize your long-term projections, but then step back.
00:51:52.380 | Again, take one year at a time.
00:51:55.180 | Most of the decisions we make in retirement aren't permanent, so you don't have to have
00:52:00.260 | a plan for estimating how much taxes you'll owe over the next 20, 30 years.
00:52:05.060 | Just continue to improve your education.
00:52:06.380 | I know the Boglehut forum, for example, that you wrote this question on has great educational
00:52:10.620 | insights and resources.
00:52:12.200 | Just continue learning and give yourself some grace and compassion that you don't have to
00:52:16.420 | know everything.
00:52:17.860 | This one is from username USAFPerio, who writes, "I'm four and a half years out from my military
00:52:23.740 | retirement.
00:52:24.740 | I'll be 51.
00:52:25.740 | And with my pension, with a cola, and my portfolio, I'll be financially independent and not needing
00:52:32.380 | to work again for money.
00:52:33.980 | The only big downside is we haven't owned a home in many years, and therefore we have
00:52:38.020 | no home equity.
00:52:39.700 | Can you comment on what I should be considering as I plan to finally purchase a home, such
00:52:45.100 | as paying in full versus taking out a mortgage in retirement?
00:52:48.220 | I could pay for a home outright from my brokerage account, but it would be a big capital gains
00:52:53.000 | tax hit, although I'm enamored by the idea of having no mortgage payments."
00:52:58.600 | Interest rates have been like really going up.
00:53:00.400 | Mortgage rates are now at a place where people are starting to think, "Maybe I pay off my
00:53:03.960 | mortgage early."
00:53:05.040 | You're enamored by the idea of having no mortgage payment, but you're worried about capital gains
00:53:09.640 | tax hit.
00:53:11.080 | It could make sense for you to finance a mortgage, but pay it off more aggressively than minimally.
00:53:16.940 | So looking at a 15-year versus a 30-year, I'm actually a fan of a 30-year mortgage,
00:53:21.860 | but paid off within 15 years.
00:53:24.080 | I actually have a mortgage flexibility calculator showing if you get a 15-year mortgage or a
00:53:30.160 | 30-year mortgage.
00:53:31.320 | Or scenario three is, what if I get a 30-year mortgage, but paid off in 15 years?
00:53:36.440 | Because of the change in interest rate between a 15-year and a 30-year mortgage, you might
00:53:39.920 | be paying for that opportunity cost, but it provides some breadth and flexibility in your
00:53:44.560 | payments moving forward.
00:53:45.780 | Because it's very hard to turn a 15-year mortgage into a 30-year mortgage, but it's very easy
00:53:50.160 | to turn a 30-year mortgage into a 15.
00:53:52.840 | It probably makes sense to get the longer mortgage, but pay it off aggressively, especially
00:53:56.840 | given your situation.
00:53:58.320 | Yeah, I think about, I'm enamored by the idea of having no mortgage payment, but it would
00:54:03.440 | be a big capital gains tax hit.
00:54:06.440 | I just go back to money is a tool.
00:54:09.480 | It's not the end goal.
00:54:10.920 | If you're going to feel good about having no mortgage payment, and I won't even go down
00:54:14.400 | the nerd rabbit hole of sequence risk and borrowing at 7% to invest in bonds paying
00:54:19.840 | at 4.5%, but again, money is a tool.
00:54:23.600 | If you can use money to feel better, and certainly it's not unreasonable in this scenario, that's
00:54:28.520 | certainly something worth considering, taxes aside.
00:54:31.680 | I love that you mentioned their preference for not having no mortgage.
00:54:35.380 | This could also mean getting a mortgage, but paying off the house within one year, but
00:54:39.600 | splitting that capital gains tax hit into two years rather than just one.
00:54:44.320 | Dave learning more from the Volgas forums writes, does Cody help folks develop a backup
00:54:50.240 | plan to reenter the workforce in case of a fire failure?
00:54:55.200 | That is a big portion of their budget for conferences to maintain skills, or at least
00:55:00.640 | advised to keep up their professional contacts.
00:55:04.000 | So both risk management and flexibility are fundamental tenets within the fire community.
00:55:09.560 | If you're retiring from a profession that requires a lot of continued education to avoid
00:55:13.580 | losing your license, you may want to spend the money and continue your education just
00:55:18.300 | to keep that license just in case you have to go back to work.
00:55:21.440 | By the way, not just financially, but you might be three years into early retirement
00:55:24.840 | and realize, you know what?
00:55:25.840 | I really miss my career.
00:55:26.840 | I would actually love to do that career.
00:55:29.060 | We've got another question from want to retire early.
00:55:32.800 | How to avoid the regret of waiting too long to retire and what are the telltale signs?
00:55:38.120 | Not a partner with your spouse, so you are on the same page for early retirement.
00:55:44.220 | So in terms of regret of waiting too long to retire, what are the signs?
00:55:48.100 | First of all, know your numbers.
00:55:49.900 | Consider how you'd manage risk and this is a big part, embrace uncertainty and self-compassion.
00:55:55.080 | So the fear of retiring usually isn't about the money.
00:55:59.360 | There are deeper cognitive issues and opportunities there.
00:56:02.900 | One way to regret waiting too long is if you're on the fence of like, I don't know if I'm
00:56:07.180 | ready to retire or not, this is actually a good time to hire a counselor or a therapist.
00:56:11.380 | Having a mental health professional in your life is just as important as hiring a financial
00:56:15.020 | planner or listening to the Boglehead podcast.
00:56:17.740 | So part of your education should be not just learning about money, learning about your
00:56:21.380 | money, but learning more about yourself.
00:56:23.820 | So invest in your mental health.
00:56:25.460 | By the way, if you don't already invest in your mental health in terms of your time,
00:56:29.140 | energy and finances, just really, really consider that.
00:56:32.020 | And also if it helps, like just go beyond the stigma of that.
00:56:34.620 | Like I see a counselor once a week and I think it's really important for us even in the profession
00:56:38.580 | to be vulnerable about the need for mental health services.
00:56:41.620 | So the telltale signs are when financial planning software says 100% "probability of success"
00:56:48.500 | even with conservative assumptions, but yet pre-retirees, they don't want to believe it.
00:56:53.260 | They're like, there's no way that's true.
00:56:55.100 | There's no way that I can retire.
00:56:56.100 | Like there must be something wrong with the software, right?
00:56:58.840 | And not only that, a telltale sign is with confirmation bias, pre-retirees, they're often
00:57:03.920 | seeking out fear-driven financial and political media.
00:57:07.380 | I'm sure we all know that person who, you know, they're on the fence of retiring or
00:57:10.980 | not.
00:57:11.980 | And they're spending all their time watching investment news, reading every article they
00:57:15.140 | can about, you know, this is how much you need to retire.
00:57:17.660 | So if you see yourself going down a rabbit hole, almost having confirmation bias or trying
00:57:21.620 | to find something that supports your fear of not retiring.
00:57:24.780 | If you're reading articles about how you need $4 million to retire no matter who you are,
00:57:29.140 | like that's a telltale sign, you know, not just going too deep, but you're also, you're
00:57:32.660 | probably ready to retire.
00:57:34.540 | And lastly, take away the numbers for a minute, right?
00:57:37.640 | So talk about and visualize your family's ideal life together.
00:57:40.920 | And then only then should you explore how your current and future financial situation
00:57:44.520 | can support that mutual vision.
00:57:46.680 | You talk about your spouse, this conversation usually goes sideways when one spouse wants
00:57:50.800 | the other spouse to be on their page, not on the same page.
00:57:54.640 | So I hear all the time people say, Hey, like, how can I get my spouse on the same page in
00:57:58.780 | terms of being on a path to early retirement?
00:58:01.440 | When you say same page, what you're really saying is how can I get them on my page?
00:58:05.000 | And it really takes stepping back and understanding that they have a vision of their ideal life
00:58:08.900 | as well.
00:58:09.900 | So let them create a vision for their ideal life.
00:58:13.120 | Only then plug in the money, plug in all the ideas you have about, you know, how to get
00:58:17.480 | on the path to early retirement.
00:58:19.240 | And it'll help.
00:58:20.240 | And by the way, listen, don't talk is the best advice I can give when trying to get
00:58:23.960 | a spouse on the same page.
00:58:26.480 | Great advice, Cody.
00:58:27.480 | Well, I can't say that my wife and I did early retirement.
00:58:31.040 | We did do a sabbatical gap year, we took roughly a year off to do some traveling.
00:58:37.200 | And that just started with us having a conversation about it, making a couple dates to talk about
00:58:43.600 | what that would look like.
00:58:45.120 | So just talking about it, that was the first step.
00:58:48.880 | Cody, thank you so much for joining us today.
00:58:52.080 | Any final thoughts before I let you go?
00:58:55.320 | I've got to say, I actually have a trademark this phrase, it's keep finance personal.
00:59:00.240 | We're all personal finance nerds.
00:59:02.280 | We're all listening to all the podcasts, we're reading all the articles about "personal finance,"
00:59:07.240 | but keep finance personal.
00:59:09.020 | What this means is when you think about the advice somebody else is giving you, even the
00:59:14.000 | stuff I said today, right?
00:59:15.560 | I do not understand your personal situation, or most people giving you advice are only
00:59:19.960 | giving advice based on their circumstance and how they think about things and their
00:59:24.200 | biases.
00:59:25.200 | So when you're making financial decisions, when you're gaining financial education, keep
00:59:29.080 | finance personal, always think about whose financial plan is this?
00:59:32.920 | Is this the financial plan of the person writing the article?
00:59:35.880 | Really think any time I consume financial information, how does this actually apply
00:59:40.040 | to me?
00:59:41.040 | A good example of this.
00:59:42.040 | So John, you live in California, right?
00:59:43.800 | Yep, San Diego.
00:59:45.160 | So if I asked you, John, "Hey, where should I go to lunch today?"
00:59:47.840 | You might say, "Oh, you should go to In-N-Out Burger."
00:59:50.200 | And I would be like, "Well, I don't have In-N-Out Burger where I live."
00:59:52.580 | You gave me advice on where to go to lunch based on where you could go to lunch, not
00:59:55.720 | based on where I could go to lunch.
00:59:57.120 | So keep in mind that when people are giving you financial advice, they're saying what
01:00:00.320 | they would do, not what you should do based on your own.
01:00:03.520 | There's two parts to this, your comprehensive financial ecosystem and your unique values
01:00:07.600 | and desired outcomes as a family.
01:00:09.680 | Recognize, understand the numbers, understand your values and desired outcomes before you
01:00:13.480 | start asking other people for advice.
01:00:15.680 | Wonderful.
01:00:16.680 | Thank you, Cody.
01:00:17.680 | Cody, I'm super excited to meet you at the Bullets Conference this year.
01:00:21.820 | Folks will get to meet Cody and all sorts of amazing guests we're going to have this
01:00:25.320 | year at the 2023 conference.
01:00:27.800 | It's going to be in Maryland, October 13th through the 15th, boglescenter.net/2023conference.
01:00:33.960 | We've got around 60 spots left to register as of this recording.
01:00:37.560 | So make sure to grab your spot before we are full up.
01:00:41.680 | Cody, thank you so much for joining us.
01:00:44.160 | Absolutely.
01:00:45.160 | Anytime.
01:00:46.160 | And that wraps up our interview with Cody Garrett.
01:00:49.680 | And depending upon how long it takes for the last few spots of the conference to fill up,
01:00:56.720 | you might still have a chance to register for the 2023 Bogleheads Conference.
01:01:02.520 | Go to boglescenter.net/2023conference for more information.
01:01:07.840 | I'll be back next month returning as guest host for the Bogleheads on investing podcast.
01:01:13.280 | It'll be my final month covering for Rick Perry before I returned to our live Twitter
01:01:17.800 | series for the Bogleheads.
01:01:20.560 | Until next month, you can check out a wealth of information for do-it-yourself investors
01:01:24.960 | at the John C. Bogle Center for Financial Literacy at boglescenter.net.
01:01:30.440 | And check out Bogleheads.org, Bogleheads Twitter, Bogleheads Wiki, the Bogleheads YouTube channel,
01:01:37.560 | Bogleheads Facebook, Bogleheads Reddit, the John C. Bogle Center for Financial Literacy
01:01:42.280 | on LinkedIn, and local and virtual chapters.
01:01:46.420 | And a thank you to all the folks who helped make this possible, including Nathan Garza,
01:01:52.800 | our podcast editor, and Jeremy Zook, our podcast transcriber.
01:01:57.600 | I could not do it without their help.
01:02:00.800 | And finally, this is my plea.
01:02:03.880 | We had over 20,000 downloads per episode over the last few months.
01:02:10.120 | If we could just get some of those folks to leave a review, subscribe, and to rate the
01:02:16.340 | show, that'll help more folks find this resource for do-it-yourself investors.
01:02:21.780 | Thank you again for checking out this episode of the Bogleheads on investing podcast.
01:02:26.580 | Until next month for our next show, have a great one.
01:02:29.380 | [Music]
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